Court name
Supreme Court
Case number
SA 28 of 2019
Case name
China State Engineering Construction Corporation v NAC
Media neutral citation
[2020] NASC 28
Headnote and holding:

The appeal arises from the order of the court a quo reviewing and setting aside a tender award made by the Namibia Airports Company (NAC), to China State Engineering Construction Corporation (Southern Africa) (Pty) Ltd (China State) for the construction of taxiways and apron at the Ondangwa Airport. In the court a quo, China State contested the merits of the review on both procedural and substantive grounds. Similarly, in the notice of appeal against the High Court’s judgment and order, China State challenged the High Court’s finding that the NAC had made out a case for review. In the High Court, the new board of the NAC sought to review and set aside a tender awarded to China State by the former board principally because of non-compliance with the company’s procurement policy. The self-review was challenged on procedural and substantive grounds, including an objection in limine that there was an unreasonable delay in seeking the review.

 

The High Court was satisfied that there was no unreasonable delay and that, in the event it was found to be wrong in that conclusion, it was a proper case for condonation to be granted for the late prosecution of the review. The High Court concluded that the NAC made out a case for the relief it sought and set aside the decision and resolutions taken by the old board on 23 June 2016, awarding the tender to China State, with costs.

 

The notice of appeal impugned the High Court’s decision in all respects in which that court found against China State. At the hearing, the appellant only challenged the High Court’s finding that there was no unreasonable delay, and if it was wrong condoning such delay.

 

On appeal to the Supreme Court:

Held that the NAC failed to demonstrate that all the steps taken by it after the new board assumed office prior to the actual launch of the review application were necessary, and that, accordingly there was unreasonable delay in institution of review proceedings.

 

Held that, as regards the High Court’s condonation of the unreasonable delay, for the appeal court to interfere, it must be satisfied that the High Court exercised its discretion improperly.

 

Held that the High Court did not misdirect itself and that for the reasons given a quo and others the present was a proper case for condonation. The manner in which the award was made leaves the reasonable observer with an uneasy feeling that the process involving the spending of public funds was not transparent.

 

Held that public interest is best served by reopening the entire process to competitive public bidding so that assurance is had that public resources are expended in the most cost-effective way. Court accordingly allows the appeal only in so far as the High Court found that there was unreasonable delay, but confirms that court’s conclusion that (a) the case had been made out to condone such delay and (b) to review and set aside the award made by the old board to China State.

Judge
Damaseb DCJ
Hoff JA
Frank AJA

Coat of Arms.bmp,Coat of Arms.bmp,Coat of Arms.bmp,Coat of Arms.bmp

 

 

 

  REPORTABLE

CASE NO: SA 28/2019

 

IN THE SUPREME COURT OF NAMIBIA

 

In the matter between:

 

CHINA STATE ENGINEERING CONSTRUCTION CORPORATION          Appellant

 

and

 

NAMIBIA AIRPORTS COMPANY LTD                                                         Respondent

 

Coram:            DAMASEB DCJ, HOFF JA and FRANK AJA

Heard:             6 March 2020

Delivered:       7 May 2020

 

Summary:       The appeal arises from the order of the court a quo reviewing and setting aside a tender award made by the Namibia Airports Company (NAC), to China State Engineering Construction Corporation (Southern Africa) (Pty) Ltd (China State) for the construction of taxiways and apron at the Ondangwa Airport. In the court a quo, China State contested the merits of the review on both procedural and substantive grounds. Similarly, in the notice of appeal against the High Court’s judgment and order, China State challenged the High Court’s finding that the NAC had made out a case for review. In the High Court, the new board of the NAC sought to review and set aside a tender awarded to China State by the former board principally because of non-compliance with the company’s procurement policy. The self-review was challenged on procedural and substantive grounds, including an objection in limine that there was an unreasonable delay in seeking the review.

 

The High Court was satisfied that there was no unreasonable delay and that, in the event it was found to be wrong in that conclusion, it was a proper case for condonation to be granted for the late prosecution of the review. The High Court concluded that the NAC made out a case for the relief it sought and set aside the decision and resolutions taken by the old board on 23 June 2016, awarding the tender to China State, with costs.

 

The notice of appeal impugned the High Court’s decision in all respects in which that court found against China State. At the hearing, the appellant only challenged the High Court’s finding that there was no unreasonable delay, and if it was wrong condoning such delay.

 

On appeal to the Supreme Court:

Held that the NAC failed to demonstrate that all the steps taken by it after the new board assumed office prior to the actual launch of the review application were necessary, and that, accordingly there was unreasonable delay in institution of review proceedings.

 

Held that, as regards the High Court’s condonation of the unreasonable delay, for the appeal court to interfere, it must be satisfied that the High Court exercised its discretion improperly.

 

Held that the High Court did not misdirect itself and that for the reasons given a quo and others the present was a proper case for condonation. The manner in which the award was made leaves the reasonable observer with an uneasy feeling that the process involving the spending of public funds was not transparent.

 

Held that public interest is best served by reopening the entire process to competitive public bidding so that assurance is had that public resources are expended in the most cost-effective way. Court accordingly allows the appeal only in so far as the High Court found that there was unreasonable delay, but confirms that court’s conclusion that (a) the case had been made out to condone such delay and (b) to review and set aside the award made by the old board to China State.

 

_______________________________________________________________________________________________________________________

APPEAL JUDGMENT

_______________________________________________________________________________________________________________________

DAMASEB DCJ (HOFF JA and FRANK AJA concurring):

Introduction

  1. The present appeal arises from an order of the High Court reviewing and setting aside a tender award made by a statutory body,[1] the Namibia Airports Company (the NAC), to China State Engineering Construction Corporation (Southern Africa) (Pty) Ltd (China State) for the construction of taxiways and an apron at the Ondangwa Airport.

 

  1. It is common ground that in making the tender award to China State the NAC breached the terms of its procurement policy which prescribes that it may only purchase goods and services through a competitive bidding process. The only exceptions allowed under the procurement policy are stated in the procurement policy as follows:

 

‘The Tender and Technical Committee may approve purchases without following the normal quotation/tender process where this is deemed necessary and justifiable . . . In addressing life threatening situations and in compliance to urgent directives from the Directorate of Civil Aviation [DCA].’[2]

 

The policy goes on to mention three categories of case which will justify departure: ‘emergencies’ which arise ‘when a procurement decision needs to be taken within a short span of time and the normal procedure . . . cannot be followed due to the duration of the process’; ‘non-performance’ which arises ‘when a purchase order is raised but the supplier is unable to perform as required’ and ‘specialised nature’ where ‘the supplies /and or works required are of specialised proprietary nature and there is no compatible alternative’.

 

  1. It is common cause that none of the exceptions applied in respect of the tender awarded to China State.

 

  1. The tender award by the NAC to China State was made on 23 June 2016 by a board of directors which vacated office on that date (the old board or the former board). A new board (chaired by a practising legal practitioner) assumed office on 1 September 2016 and, faced with the obvious non-compliance by the former board with the NAC’s procumbent policy, refused to carry on with the award and resolved to have it reviewed and set aside. That it was in law competent for the NAC as a statutory body governed by Art 18 of the Namibian Constitution[3] (the Constitution) to seek self- review of its own decision was quite properly not in dispute a quo.
  2. It is now firmly settled that administrative decision-making remains valid and binding, however flawed, unless set aside by a competent court.[4] The consequence of that principle is that in a constitutional state governed by the rule of law and legality, where an administrative decision maker such as the NAC becomes aware that its decision-making is tainted by illegality (either arising from fraud by its officials, non-compliance with statutory prescripts or any other vitiating circumstance recognised in law), it is required,[5] unless a prior challenge has been mounted by an aggrieved person with proper standing, to approach court to have the decision reviewed and set aside. Where there has been a prior challenge it may choose to go on record for the purpose of informing the court that it supports the review and make full disclosure of all the relevant evidence and documents under its control; and abide the decision of the court. What is clear is that it (and its officials entrusted with public responsibilities) must act in good faith and not become obstructive and be defensive against those seeking to have the decision-making corrected.

 

  1. In the court below, China State vigorously contested the merits of the review on both procedural and substantive grounds. Similarly, in the notice of appeal against the High Court’s judgment and order, China State challenged the High Court’s finding that the NAC had made out a case for review.

 

 

Events leading up to the award

  1. The NAC (a public company incorporated in terms of the Airports Company Act 25 of 1998 and the Companies Act 28 of 2004) owns and operates all public civilian aerodromes[6] in Namibia, including the one at Ondangwa in the north of Namibia. It is common cause that during 2014 the Ondangwa Airport runway and associated infrastructure required repair, rehabilitation and extension. At the time, the chief executive officer of the NAC was Mr Tamer El-Kalawi (El-Kalawi) while Mr Courage Silombela (Silombela) was the NAC’s Senior Manager: Engineering, Information Technology and Projects. These two NAC executives met with officials of the DCA and the NAC’s consulting engineers Aurecon Namibia (Pty) Ltd (Aurecon) on 1 September 2014 to discuss the upgrades to the Ondangwa Airport runway. At that meeting, the parties agreed that the upgrades be done in three phases: Phases 0, 1 and 2.

 

  1. Phase 0 involved the temporary rehabilitation of parts of the runway, construction of a turning area and ancillary works. Subsequent thereto, the former board resolved that the Phase 0 works be carried out on a closed tender basis in order to expedite the work. That tender was awarded to Sinohydro Corporation Ltd on 24 September and duly completed. Thereafter, a further closed tender was called for in respect of Phase 1 which involved the rehabilitation and extension of the Ondangwa Airport runway. China State was in the pool of closed-bid tenderers. On the recommendation of the Tender and Technical Committee of the NAC, China State was awarded the tender for Phase 1. That work was completed on schedule in July 2016. It is what happened in relation to Phase 2 that the present dispute relates to.
  2. Whilst Phase 1 was underway, El-Kalawi and Silombela took the view that something needed to be done to implement Phase 2 immediately. In September 2015, these two executives discussed the matter with Aurecon, on how that could be achieved. Silombela came to the conclusion that Phase 2 should be done (a) by increasing China State’s scope of work under Phase 1 and (b) without a competitive bidding process. Aurecon was then asked by either or both NAC executives to prepare a preliminary design for Phases 2 and 3 together with a preliminary design cost estimate for Phase 2. Aurecon produced that on 5 April 2016. That was passed on to China State who then furnished the NAC with a quotation (schedule or bill of quantities) on 18 April 2016 in the amount of N$168 588 355,08.

 

  1. Silombela and El-Kalawi jointly prepared a submission to the former board for its meeting of 27 May 2016, for (a) the appointment of China State as the contractor for Phase 2, and (b) authorisation of payment to China State of N$200 423 355,09 (VAT included). What is singularly lacking in this document is any justification for departure from the procurement policy. What is significant though is that the two executives justified the appointment of China State who was then on location carrying out Phase 1, as follows:

 

‘Phase 2 of the Tender shall not go out on public tender as this phase of the project is seen as the continuation of phase 1.

 

. . .

 

The contractor is currently on site and established, hence reducing the project cost, significantly. Furthermore they have proved beyond reasonable doubt that he (sic) is capable of carrying out projects of such magnitude. The contractor has completed the phase 1, one month ahead of his (sic) program. They have done improvements on the Francistown Airport pavement, and SSR International Airport in Mauritius in June 2013’. (Emphasis supplied).

 

  1. The former board approved the submission at its meeting of 23 June 2016 and the award was communicated to China State on 24 June 2016 by El-Kalawi. In his affidavit in support of the self-review, Mr Lot Haifidi (Haifidi), the acting chief executive officer of the NAC at the time of the self-review, describes the conduct of the two executives in these terms:

 

‘It is apparent that Mr Silombela’s motive, and indeed as supported by Mr El-Kalawi was that they wanted to keep the same team as phase 1 at any cost and therefore manipulated the process to achieve this. In doing so they acted improperly and caused the board to act in an unlawful and irregular manner . . .’

 

  1. According to Haifidi, when the board approved the submission, the original bill of quantities (N$200 423 355,09) had changed to N$211 616 796,30 (VAT included). He states that:

 

‘It has never been made clear how the amount of N$ 211,616,796.30 (approved by the board) was arrived at and when the amount was escalated to this.’

 

  1. Haifidi makes clear that the submission to the board was not sanctioned by the Tender and Technical Committee and neither the two executives nor the former board ‘sought to invoke the exemption/exception procedures under the [procurement] policy’. He alleges that the two executives ‘had created a situation to avoid Phase 2 being put in (sic) competitive tender’. He adds that none of the former board members had been presented by Silombela with the submission presented to the board on 23 June 2016 and that the board was presented with three different versions of bills of quantities for Phase 2 ‘but nonetheless approved a submission which had amounts only presented to them for the first time at the 23 June 2016 board meeting and was not satisfactorily explained’.

 

  1. Haifidi states in his affidavit that the recommendation to appoint China State for Phase 2 on the basis that it was a continuation of Phase 1 was sprung on the board by the two executives for the first time at the board meeting of 23 June 2016 while more than 8 months had passed since Silombela gave Aurecon the go-ahead to commence design of Phase 2. In other words, that there was more than enough time after the decision was taken to embark on Phase 2, to subject the works to competitive tender.

 

Proceedings in the High Court

  1. In the High Court, the NAC sought to review and set aside its own tender awarded to China State on the grounds that:

 

  1. there was a breach of the procurement policy;

 

  1. the two senior executives of the NAC made material and vitiating misrepresentations to the old board; and

 

  1. the old board failed to apply its mind to important matters, including the absence of approved funds for the project.

 

  1. The self-review was challenged on every conceivable ground, including the alleged failure on NAC’s part to join El-Kalawi, Silombela and Aurecon. Crucially, the review grounds were denied by China State and, in addition, it raised an objection in limine that there was an unreasonable delay in seeking the review.

 

  1. The High Court dismissed the non-joinder objection. It was also satisfied that there was no unreasonable delay and that, in the event it was found to be wrong in that conclusion, it was a proper case for condonation to be granted for the late prosecution of the review. The High Court concluded that the NAC made out a case for the relief it sought and set aside the decision and resolutions taken by the old board on 23 June 2016, communicated to China State on 24 June 2016. The High Court also declared that any contract that may have come into existence between the NAC and China State as a result of the award is ‘void ab initio and is hereby set aside’. The court a quo ordered China State to pay the NAC’s costs, consequent upon the employment of one instructing and three instructed counsel.

 

  1. It is important to briefly set out the main conclusions reached by the court a quo as regards why the review had to succeed. The court found that at the instigation of the two executives the ‘procurement processes were shelved deliberately and unlawfully’; that the former ‘board was duped into believing that Phase 2 was a continuation of the previous phase, which was clearly not the case’ and that it was ‘apparent that the Board did not properly apply their minds to the correct facts’. The court went on to hold that:

 

‘The fact that the tender increased astronomically by N$43m, with the Board being hoodwinked by Mr Silombela into believing that the increase was a mere 1.5% escalation, when it was actually 26%, is a hallmark of illegal conduct on the part of the applicant’s employees and a failure by the Board to play its oversight role properly and conscientiously.’

  1. The learned judge a quo was also satisfied that the conduct of the two executives resulting in the award to China State was ‘illegal and reckless’ and that the advice they gave to the board resulted in a decision that was ‘most questionable and financially imprudent’.

 

  1. The notice of appeal impugns the High Court decision in all respects in which that court found against China State. The raft of the appeal grounds were however abandoned when the heads of argument were filed and the only issue that has remained for decision on appeal is whether the new board unreasonably delayed in seeking self-review. As aptly put by Mr Breytenbach SC in the written heads of argument on behalf of China State, the latter pursues only two related grounds of appeal: That the High Court erred in finding that the NAC did not delay unreasonably in instituting the proceedings for review; that the High Court erred in finding that even if the delay is found to be unreasonable, the late institution of the review proceedings should be condoned.

 

  1. Whether or not there was an unreasonable delay is a question of fact not involving the exercise of a discretion.[7] The inquiry is a factual one upon which a value judgment is made.  If the delay is found to be unreasonable, the court exercises a discretion (as the High Court did) whether or not to condone the unreasonable delay.[8] This court’s power to interfere with the exercise of that discretion is not open-ended. Where the High Court has decided to condone an unreasonable delay, we must be satisfied that the High Court approached the matter on wrong principle, it did not exercise the discretion judicially, it did not bring an unbiased judgment to bear on the issue[9] or that it took irrelevant factors into consideration and or disregarded relevant factors and considerations.[10]

 

  1. According to counsel for China State, the High Court erred in finding that there was no unreasonable delay and that finding improperly influenced it in the exercise of the discretion whether or not to condone the delay.

 

The law

  1. When a decision requires to be reviewed, the aggrieved party must proceed with due expedition and challenge it promptly. As stated by O’Regan AJA in Keya v Chief of the Defence Force & others:[11]

 

‘[21]   This Court has held that the question of whether a litigant has delayed unreasonably in instituting proceedings involves two enquiries: the first is whether the time that it took the litigant to institute proceedings was unreasonable. If the court concludes that the delay was unreasonable, then the question arises whether the court should, in an exercise of its discretion, grant condonation for the unreasonable delay. In considering whether there has been unreasonable delay, the High Court has held that each case must be judged on its own facts and circumstances so what may be reasonable in one case may not be so in another.  Moreover, that enquiry as to whether a delay is unreasonable or not does not involve the exercise of the court’s discretion.

 

[22]    The reason for requiring applicants not to delay unreasonably in instituting judicial review can be succinctly stated. It is in the public interest that both citizens and government may act on the basis that administrative decisions are lawful and final in effect. It undermines that public interest if a litigant is permitted to delay unreasonably in challenging an administrative decision upon which both government and other citizens may have acted. If a litigant delays unreasonably in challenging administrative action, that delay will often cause prejudice to the administrative official or agency concerned, and also to other members of the public. But it is not necessary to establish prejudice for a court to find the delay to be unreasonable, although of course the existence of prejudice will be material if established. There may, of course, be circumstances when the public interest in finality and certainty should give weigh to other countervailing considerations. That is why once a court has determined that there has been an unreasonable delay, it will decide whether the delay should nevertheless be condoned.  In deciding to condone an unreasonable delay, the Court will consider whether the public interest in the finality of administrative decisions is outweighed in a particular case by other considerations.’

 

  1. The following dictum by the High Court in Keya v Chief of Defence Force[12] was approved by this court in South African Poultry Association & others v Minister of Trade & others:[13]

 

‘It is now judicially accepted that an applicant for review need not rush to Court upon the cause of action arising as he is entitled to first ascertain the terms and effect of the offending decision; to ascertain the reasons for the decision if they are not self-evident; to seek legal counsel and expert advice where necessary; to endeavor to find an amicable solution if that is possible; to obtain relevant documents if he has good reason to think they exist and they are necessary to support the relief desired; consult with persons who may depose to affidavits in support of the review; and then to consult with counsel, prepare and lodge the launching papers. The list of possible preparatory steps and measures is not exhaustive; but in each case where they are undertaken they should be shown to have been necessary and reasonable. In some cases it may be required of the applicant, as part of the preparatory steps, to identify and warn potential respondents that a review application is contemplated. Failure to so warn a potential respondent may lead to an inference of unreasonable delay’.

 

Discussion

  1. There is no longer a live issue between the parties as regards whether or not the High Court erred in its conclusion that there was illegal or improper conduct that justified the setting aside of the tender award to China State. In other words, the review grounds are conceded. China State however persists that there was an unreasonable delay in seeking self-review and that the delay has occasioned it and the general public prejudice; that the High Court erred in not so finding and that the appeal should be upheld for that reason.

 

  1. It now becomes necessary to consider the steps taken by NAC since 23 June 2016 until the review was instituted on 7 December 2017 and to assess whether they were necessary and reasonable. Mr Bhana SC for the NAC submitted that in determining whether NAC’s delay was unreasonable, the court should not engage in a ‘microscopic dissection’ of each period of delay and the reasons therefor.  Whereas this may be correct it does not mean that an applicant can get away with vague and unsubstantiated allegations. The authorities are clear, namely that the steps taken by an applicant must be spelled out with sufficient details to give the court an understanding of what happened.  This court confirmed as much in both Keya and South African Poultry Association. The cases make clear that each preparatory step undertaken by the delaying party must be shown to have been necessary and reasonable.[14]

 

  1. It is common cause that the self-review was instituted 17 months after the decision awarding the tender to China State. On behalf of China State, it was correctly conceded in argument that it would be unfair to criticise the NAC for any inaction before the new board assumed office on 1 September 2016. The relevant period against which the NAC’s actions must be measured is therefore after 1 September 2016.

 

  1. According to Haifidi, upon assuming office, the new board started to review a number of awards, including the one to China State, ‘rushed through’ by the former board at its last meeting of 23 June 2016. Put together, these awards were in excess of N$400 million. The China State award was the single largest. The new board decided to engage the services of outside lawyers, their present legal practitioners of record, to advise on the ‘legality or otherwise’ of the several awards. To facilitate the work of the outside lawyers, Haifidi says that as in-house legal advisor he needed to have access to the relevant documents running into ‘hundreds of pages’ but he was obstructed by El-Kalawi and Silombela in accessing critical documents.

 

  1. NAC’s dilemma, Haifidi says, was complicated by the fact that after the new board took office, China State begun to ‘entrench its position’ by insisting to commence with the work by directing a letter to Aurecon on 26 October 2016 to that effect. The pressure became greater when on 26 October 2016 Aurecon wrote to NAC urging it to sign the formal agreement with China State so that the work could commence. (Significantly, it must be said, Aurecon’s letter left the option open to NAC to ‘alternatively withdraw’ the 24 June 2016 letter awarding the tender to China State).

 

  1. It was not until 28 November 2016 that the NAC under the new board wrote to Aurecon that the matter was ‘under consideration’. According to Haifidi ‘by this date already, the law firm Kangueehi and Kavendjii had been engaged to advise on the probity of the contract, as [he] was still struggling to obtain relevant records and documents underlying the decision’. According to the deponent, ‘sometime in December 2016’, the NAC received a preliminary legal opinion from the external lawyers ‘on whether a binding contract existed between NAC and China State’. (The nature of the legal advice is not disclosed). However, Haifidi adds that the lawyers advised the NAC ‘to initiate a privileged forensic investigation in anticipation of litigation.’ Allegedly, the external ‘legal team’ required ‘sight of further documents and information as well as the outcome of the suggested forensic investigation before finalising the advice and being in a position to settle the application’.

 

  1. Based, it is alleged, on the lawyer’s advice, the new board on 20 December 2016 took a decision that ‘there was no binding contract’ between the NAC and China State. Further correspondence was received from China State on 22 December 2016 asserting that it had a valid contract and that they wanted to commence the work ‘no later than end of January 2017’. Aurecon also wrote to the NAC on 12 January 2017 requesting that the Phase 2 work commence at once.

 

  1. On 25 January 2017 NAC’s legal practitioners wrote a letter to China State that its demand to commence work will not be acceded to, ‘owing to the absence of a valid contract and the procedural defects identified in process leading to the award’. On 10 February 2017 China State’s legal practitioners replied asserting that there in fact was a valid contract.

 

  1. According to Haifidi, it was on 10 March 2017 that the new board decided to go to court to review and set aside the 23 June 2016 decision since it ‘remained valid until set aside’ by court. The new board had allegedly decided at the meeting of 10 March 2017 to engage auditors Deloitte ‘to complete the privileged forensic investigation’ asked for by the outside legal practitioners. According to the deponent, that was insisted on by NAC’s legal practitioners before proceeding to court with the matter so as to place before court ‘a fuller picture as possible’. Deloitte was given a letter of engagement only on 6 April 2017 to conduct the forensic audit which would involve extracting from the ‘computers and electronic devices’ of El Kalawi and Silombela documents relevant to the award.

 

  1. Deloitte allegedly also experienced resistance from the two executives and it was only on 25 September 2017 that the ‘privileged report became available’. The report was availed to NAC’s legal practitioners in October 2017.  It was about that time, it appears, that the decision was taken to institute disciplinary proceedings against the two senior executives. Haifidi alleges that the NAC took the view that the explanations that the two senior executives would proffer during the disciplinary proceedings would ‘impact’ on the anticipated review. Silombela’s disciplinary hearing was set for 6 November 2017 and that of El-Kalawi for 5 December 2017. They both opted to part ways with the NAC without facing disciplinary proceedings and, according to Haifidi, it was at this stage that the decision was taken to file the review proceedings.

 

  1. According to Mr Breytenbach for China State, it is apparent from the record that the NAC failed to satisfactorily explain, as required by law, the long delay in seeking review. Counsel was prepared to accept the non-action on NAC’s part between 1 September 2016 when the new board took office and 20 December 2017 being the date on which the new board resolved that there was no valid tender award to China State as there was no contract concluded. Beyond that date, according to Mr Breytenbach, there is no reasonable explanation for the delay to seek self-review. Counsel submitted, for example, that the NAC did not satisfactorily explain why the forensic audit was not sourced earlier than it actually took place and that there was no good reason why the review had to await the outcome of disciplinary proceedings against the two senior executives.

 

  1. In oral argument, the respondent’s counsel, Mr Bhana, relied on the following facts and circumstances as contributing to the delay in launching the review: (a) the need to marshal all the facts before going to court, (b) the obstruction by Silombela and El-Kalawi of both Haifidi and Deloitte in the obtaining of documents, (c) political interference by the responsible deputy minister which took the form of putting pressure on the new board to proceed to implement the award and threatening that the external lawyers will not be paid, and (d) the external lawyer’s advice that a forensic audit first be obtained and to await the outcome of disciplinary proceedings against the two executives.

 

  1. I will start with the alleged political interference and consider the other grounds seriatim.

Political interference

  1. That the deputy minister indeed acted in the manner described is recorded in a minute of a meeting of the new board attached to the founding affidavit deposed to by Haifidi. However, nowhere in the affidavit does that deponent place reliance on alleged political interference to justify the successor board’s inaction to launch the review. Since these are motion proceedings Haifidi was obliged to do so in order to afford the respondent the opportunity to deal with the allegation. Perhaps more importantly, to afford the implicated politician the opportunity, if so advised, to come on record and to explain the circumstances of his involvement.

 

  1. The applicable principle is that it is not open to a party in motion proceedings to merely attach to an affidavit documentation and expect the court to draw inferences therefrom. The deponent to the affidavit is required to identify portions in the annexure on which reliance is placed and to make out the case which is sought to be inferred on the strength of those portions.[15] Alleged political interference therefore does not excuse the delay.

 

Marshalling the relevant facts, obstruction by NAC executives

  1. I am prepared to give the NAC the benefit of the doubt that after the new board assumed office on 1 September 2016 it needed to fully appraise itself of the facts, consult legal practitioners and to consider what course to adopt. As Haifidi states, at its last meeting on 23 June 2016 the old board made several awards totalling N$ 400 million dollars some of which, it is common cause, ended in litigation. The new board considered suspect the manner in which the old board acted and wanted to investigate the circumstances of the awards. I find nothing unreasonable about that conduct. That is what one would expect of a reasonable board.

 

  1. Apparently having considered the award in question, the board took a significant decision on 20 December 2016. In reply to a demand by China State to sign the contract so that it could commence with the work, the NAC replied that there was no contract signed and that there was therefore no valid award under which China State could perform. The only basis on which that allegation could be made is the view at that stage formed by the new board that the failure to comply with the procurement policy rendered the award irregular and unlawful. It is not apparent from the founding affidavit what further facts and documents were needed to sustain a review based on non-compliance with the procurement policy. A review ground based on non- compliance with the procurement policy would have been amply supported by the conduct of the two senior executives leading up to the former board’s 23 June 2016 meeting and the documents that served (or to Haifidi’s knowledge did not serve) at that meeting and which undoubtedly must have been obvious to the new board.

 

  1. The review grounds are supported by rather uncontroversial propositions: That no competitive tender took place; that Phase 2 was not a continuation of Phase 1; that the two executives manipulated the process to favour China State and made misrepresentations to the board and that the latter failed to apply its mind properly. Supported as those grounds are by the information which was peculiarly within Haifidi’s knowledge at the time the new board took office, the alleged obstruction by Silombela and El- Kalawi does not advance NAC’s case that it contributed to the delay in the institution of review proceedings.
  2. During argument, Mr Bhana suggested on behalf of the NAC that it was necessary to check in the computers of the two executives to ascertain if there was any criminal conduct in the manner they went about securing the award for China State. While that may have been a proper thing to do, it was not a necessary step for a review based on non-compliance with the procurement policy.

 

  1. The same considerations go for the disciplinary proceedings instituted against the two executives. The explanation offered is that the attitude taken on legal advice was that the disciplinary proceedings might reveal important facts which could be relevant to the review. There are two problems with this. The first is that it must have been obvious to the new board that such a process could have become drawn out as often such proceedings are. On that theory, the review should have waited for as long as the disciplinary proceedings remained pending. (Happily, it was not because the two executives did the honourable thing and left of their own accord). Secondly, I am not convinced that such additional disclosures would make a difference to the core complaint that the procurement policy was not adhered to in the award for Phase 2.

 

  1. According to the NAC, the delay in seeking self-review was further occasioned by the forensic audit initiated on the advice of the external lawyers. The forensic audit was described by Haifidi as a ‘privileged’ process. I can only assume that it was because of that its terms of reference and outcome were not disclosed in the review.

 

  1. It was submitted in argument on behalf of the NAC that the issue is not so much whether the forensic audit was strictly necessary, but rather that it demonstrates the new board’s state of mind in wanting to be completely satisfied with their investigation. However, the inquiry is precisely whether or not each preparatory step was in fact necessary and reasonable.

 

  1. The difficulty in obtaining documents does not at all explain why the NAC only appointed Deloitte on 10 April 2017 when the board had already on 20 December 2016 resolved that there was no contract between itself and China State and had on 6 March 2017 resolved to ask them to do a forensic audit. Further, on NAC’s own admission, its legal practitioners had already advised in December 2016 that NAC should secure more documents and complete a forensic audit, yet no action was taken on this advice until 10 April 2017. Thus, even if the forensic audit was indeed necessary and reasonable, there is no satisfactory explanation for the delay.

 

  1. More importantly, it is not immediately apparent what role the forensic audit could or it did play in advancing the prospects of the review which is based on the confined review grounds which I summed up earlier but which boils down to non-compliance with the procurement policy. In the absence of a cogent explanation of its role in the broader scheme of the review, it has not been demonstrated by the NAC that the forensic audit was a necessary step in bringing about a review of the decision of 23 June 2016.

 

  1. The chairperson of the new board is a senior practising legal practitioner. Mr Haifidi is also an admitted legal practitioner. Mr Bhana submitted that the fact that the new board’s chairperson and its in-house lawyer are legal practitioners is irrelevant to assessing NAC’s inaction. In my view, it is a relevant consideration that the new board was not bereft of information about the importance of review being sought within a reasonable time.

 

  1. The conclusion to which I come is that beyond December 2016 (a period of 9 months) there is no reasonable explanation for not launching the self-review which was only brought in December 2017. NAC therefore unreasonably delayed in instituting review proceedings in respect of the decision taken by the old board on 23 June 2016 and conveyed to China State on 24 June 2016.

 

Should the unreasonable delay be condoned?

  1. I have already explained that for this Court to interfere, we must be satisfied that the High Court exercised its discretion improperly. I am satisfied that it had not and the court certainly approached the matter on correct principle in weighing the respective interests of the parties and especially the public interest. I will briefly set out the reasons why the unreasonable delay in seeking review must be condoned. Some of these reasons coincide with those given by the High Court. I do not find it necessary to repeat them here.

 

Potential prejudice to the appellant

  1. It is China State’s case that it has and continues to suffer prejudice on account of the non-implementation of the tender. China State’s chief executive officer, Mr Zhou Xihua, deposed to the answering affidavit in opposition to the self-review application. In that affidavit he alleges that on the expectation, based on the letter of 24 June 2016 confirming the award of the tender to it, China State undertook steps and incurred expenses to ensure that Phase 2 would be carried out and completed expeditiously. It kept equipment, personnel and laboratories on site; it paid the monthly costs for Aurecon’s laboratory on site; it procured a concrete batch plant which was erected on site, it sourced mobile concrete trucks, material prefabricating formwork for the concrete works and barriers for the demarcation works; it obtained trucks and recruited operators for the batch work; it acquired project insurance and secured a performance guarantee in favour of NAC in the order of N$20 million.

 

  1. It is further stated that the NAC incurred monthly running costs, inclusive of standing time, estimated at N$4 438 900,66 since 29 June 2016. As from 1 August 2016 to the date of institution of proceedings on 7 December 2017, the standing time costs was estimated at N$66 583 509,90. It is further alleged that China State stands to suffer further prejudice if condonation is granted for the failure to launch the review within a reasonable time. Most importantly, it would be deprived of its contractual right to perform in accordance with the contract for the consideration of N$211 616 796,30 (VAT inclusive).

 

  1. Mr Breytenbach submitted on behalf of China State that to be weighed against the prejudice suffered by China State is the need for finality to the matter and the public interest to have the work associated with Phase 2 completed. In that respect, counsel relied on the assertion made by NAC’s legal practitioners of record in a letter to the registrar of this court seeking an expedited hearing date. In that letter, the legal practitioners implored the Chief Justice to assign an expedited hearing date as it was necessary to complete the work at Ondangwa Airport. According to Mr Breytenbach, that assertion puts paid to the suggestion that there are no funds for Phase 2 and points to the importance of the work under Phase 2 commencing immediately.

Disposition

  1. It will be recalled that between when China State submitted its first bill of quantities and when the board took the decision on 23 June 2016, the price had escalated by a whopping 26 percent and that the full facts were not disclosed to the former board. It is suggested by China State in its answering affidavit that Haifidi’s assertion that Silombela misled the board on the percentage increase should be rejected and that the more plausible explanation is that he had said 15 percent instead of 1,5 percent as recorded in the board minutes. This is a difficult proposition to accept because it is at odds with the contemporaneous record which Haifidi was part of creating but also because it really does not take the matter any further.

 

  1. The point is that even if Silombela had said 15 percent that would still be a material misrepresentation which, at best for China State, was most reckless. One would have expected a very senior executive of a statutory body run with public funds to have been more circumspect and to establish the correct facts and to provide the most competent advice to the board. That lack of care or rather closing the mind to the full implications of what the board was being asked to do is not to be viewed in isolation. What must also be placed in the scale is the very suspect haste with which the two senior executives acted in such an important matter that they or the board hardly had any time for reflection on the consequences of the proposed actions: be it the manner in which the award was made, it was communicated or the manner in which the increases in the bill of quantities were justified and approved.

 

  1. It is common cause that during a short span of time the bills of quantities submitted by China State increased exponentially and there is no evidence on the record that the board received considered advice on the reasonableness thereof from the very executives who should have done so. On the contrary, the record shows that there was undue haste to have the increases approved.

 

  1. The preliminary design cost estimate submitted to the NAC by Aurecon on 5 April 2016 was N$169 919 134 and an alternative layout cost estimate of N$159 000 000. Aurecon’s letter of 12 April 2016 gives a total construction and fee estimate of N$164 866 000. The bill of quantities submitted by China State to Mr Silombela on 18 April 2016 gives the amount of N$168 568 355,09. In its email to the NAC on 2 June 2016 China State wrote that it had realised that ‘some items have been under-quoted due to incomplete quotations from subcontractors and suppliers’. On that very same day, Mr Silombela asked Aurecon to advice on China State’s request to revise the bill of quantities. It appears that Aurecon advised China State to submit a revised bill of quantities because on 14 June 2016 it addressed an email to Aurecon submitting a revised bill of quantities representing the amount of N$211 616 796,30. On 15 June 2016 Aurecon expressed the professional opinion to Mr Silombela that ‘there is a good chance that these updated prices would still have been the lowest price’. That is the revised amount that the board approved on 23 June 2016, representing a price escalation of about 26 percent from the original cost estimate submitted by China State.

 

  1. As Haifidi says about the Aurecon opinion:

 

‘[I]t was wholly unnecessary for Aurecon to be speculating as to whether the prices would still ‘’seem to be market related’’ and that there was a ‘’good chance that the [ China State’s] updated prices would still have been the lowest prices’’. This is exactly what a competitive bidding process is calculated and designed to achieve – a clear indication that the process are (sic) indeed market related and that the prices are the best prices that could be obtained. Had the competitive bidding process as required by the policy been implemented this need for speculation would have been entirely unnecessary and indeed improper.

. . .

By following the irregular and improper procedure there was no bench mark against which China State prices could be measured nor could it be determined whether the prices will be market related or the lowest likely prices. It also meant that that the mere say so of those forcing through the contract in favour of China State could not be tested.’

 

  1. Whatever explanation China State offers for the fluctuations in the bills of quantities, it leaves the reasonable observer with the uneasy feeling that a process involving the spending of public funds was not transparent. It is precisely for that reason that procurement policies exist - to give the public the assurance that it gets value for money and that there was no manipulation because the process was competitive.

 

  1. The manner in which the award was made does not meet the most basic tenets of transparency and accountability and judicious use of public funds. It is clear from the evidence of Haifidi that the board heard about the implementation of Phase 2 with China State for the first time on 23 June 2016. That is most concerning because it means that El-Kalawi and Silombela begun negotiations with China State concerning Phase 2, even before the board had the opportunity to consider whether deviation from the procurement policy was necessary or proper.

 

  1. It is not hard to imagine what would have happened had the board rejected the proposal not to follow a competitive bidding process. The association that the two executives developed with China State would, in the event of a competitive tender, have raised serious conflict of interest for the two most senior individuals on whom the board would have had to rely for professional advice in the event that it chose to put Phase 2 out on competitive tender. The manner in which China State was selected demonstrates that an unhealthy relationship developed between China State and the two executives which undermines transparency. There could after that never be any arms-length relationship between the two executives and China State. That relationship, although not proved to be corrupt, raises serious concerns of corporate ethics as to merit censure by granting condonation for the unreasonable delay in seeking self-review.

 

  1. Another important consideration which strengthens the case for condonation is the complete absence of reasons which would bring the chosen procurement method within the exceptions contemplated in the procurement policy: an imminent threat arising from a state of disrepair or an urgent directive by the DCA.

 

  1. An equally compelling consideration is the complete lack of scrutiny by the board of the proposals by El-Kalawi and Silombela to justify:

 

  1. why the departure from the procurement policy was necessary; and

 

  1. whether the escalation in price was reasonable in all the circumstances, including obtaining a second opinion from an external advisor.

 

  1. The above must be juxtaposed with the prejudice to China State. I have already referred to the unhealthy relationship that developed between China State and the two executives. Having been previously hired through a competitive bidding process, China State must have been aware that the way in which it was being engaged for Phase 2 was improper. It therefore knew that it was being improperly and unfairly preferred over other potential competitors.  In that sense, China State is not entirely blameless.

 

  1. China State was told in December 2016 that the new board did not feel bound to implement the award made to it. It nevertheless, on its version, continued incurring losses. It was open to China State to seek specific performance either as a private law remedy, or to seek a mandamus against the NAC. It did neither and that failure strengthens the case for granting condonation.

 

  1. In my view, the present is not the sort of case where the interest of good administration through finality trumps the case for review. As De Smith[16] writes about the approach of the English Courts (at para 18-53):

 

‘The courts have tended to avoid formulating any precise description of what constitutes detriment to good administration. This is because claims for judicial review arise in many different situations and the need for finality may be greater in one context than another. It has, however, been observed that “there is an interest in good administration independently of hardships, or prejudice to the rights of third parties.’

 

  1. The authors go on to argue in the same paragraph that:

 

‘Courts should be unwilling to excuse a breach of the standards required by administrative law merely upon the ground that to quash the decision would cause the decision maker administrative inconvenience: “even if chaos should result, still the law must be obeyed”.’

 

To fit our facts, I would paraphrase the above to the effect that courts should not hesitate to enforce the standards required by administrative law merely upon the ground that to quash the unlawful decision of an administrative official or body which benefits a private body or person would cause financial hardship to such private person or body. Legality and the public interest demand no less.

 

  1. This is a case were the public interest is best served by reopening the entire process to competitive public bidding so that the assurance is had that public resources are expended in the most cost-effective way.

 

  1. I would accordingly allow the appeal only in so far as the High Court found that there was unreasonable delay, but confirm that court’s conclusion that (a) the case had been made out to condone such delay and (b) to review and set aside the award made by the old board to China State.

 

  1. The NAC being successful on appeal, it is entitled to its costs, both a quo and on appeal. Both parties had engaged the services of more than one instructed counsel, including senior counsel, and it was common cause that the successful party would be entitled to the costs occasioned by the employment of such additional instructed counsel. In the case of the NAC it had engaged the services of three instructed counsel and it is entitled to those costs.

 

 

The order

  1. I accordingly propose the following order:

 

  1. The appeal succeeds in part and the judgment and order of the High Court is replaced by the following order:

 

‘1.   It is declared that the applicant (NAC) unreasonably delayed in bringing the review application after 20 December 2016;

 

2.    The delay to promptly launch the review is condoned;

 

3.    The decision and resolutions taken by the board of the respondent on 23 June 2016 to award a tender to the respondent (China State) for the upgrade of the Ondangwa Airport runway, is reviewed and set aside;

 

4.    It is declared that any contract that came into existence between the respondent and the appellant as a result of the award aforesaid and communicated to the appellant on 24 June 2016, is invalid and consequently set aside;

 

5.    The applicant (NAC) is granted costs, consequent upon the employment of one instructing and two instructed legal practitioners.

 

  1. The respondent (NAC) is granted the costs in the appeal, consequent upon the employment of one instructing and three instructed legal practitioners.

 

 

 

 

                                   

DAMASEB DCJ

 

 

                                   

HOFF JA

 

 

 

                                   

FRANK AJA 

 

 

 

APPEARANCES

 

APPELLANT:                                   A M Breitenbach SC (with him E Nekwaya)

Instructed by Henry Shimutwikeni & Co Inc

 

RESPONDENT:                              A R Bhana SC (with him A W T Rowan and U A Hengari)

Instructed by Kangueehi & Kavendjii Inc

 

 

 

 

 

[1] Established under the Airports Company Act 25 of 1998.

[2] The DCA, created under s 8 of the Civil Aviation Act 6 of 2016, is a statutory body which performs regulatory functions over the NAC and the civil aviation industry.

[3] Which states: ‘Administrative bodies and administrative officials shall act fairly and reasonably and comply with the requirements imposed upon such bodies and officials by common law and any relevant legislation, and persons aggrieved by the exercise of such acts and decisions shall have the right to seek redress before a competent Court or Tribunal’.

[4] This is the so-called Oudekraal principle (Oudekraal Estates (Pty) Ltd v City of Cape Town & others 2004 (6) SA 222 (SCA) approved in for, example, Rally for Democracy and Progress v Electoral Commission of Namibia 2010 (2) NR 487 (SC); Black Range Mining (Pty) Ltd v Minister of Mines and Energy & others NNO 2014 (2) NR 320 (SC).

[5] Pepcor Retirement Fund & another v Financial Services Board & another 2003 (6) SA 38 (SCA).

[6] In terms of s 4 and the Schedule to the Airports Company Act 25 of 1998.

[7] Keya v Chief of the Defence Force & others 2013 (3) NR 770 (SC), para [21]. 

[8] Kruger v TransNamib Ltd (Air Namibia) & others 1996 NR 168 (SC) at 171F, Keya v Chief of the Defence Force & others 2013 (3) NR 770 (SC) para [21], Disposable Medical Products (Pty) Ltd v Tender Board of Namibia & others 1997 NR 129 (HC) at 132F-J, South African Poultry Association & others v Minister of Trade and Industry & others 20018 (1) NR 1 (SC) para [17].

[9] Kruger v TransNamib Ltd (Air Namibia) & others 1996 NR 770 (SC) at 173E-F.

[10] Ibid  Kruger v TransNamib Ltd (Air Namibia) & others 1996 NR 770 (SC) at 173E-F; South African Poultry Association & others v Minister of Trade and Industry & others 2018 (1) NR 1 (SC) para 44.

[11] 2013 (3) NR 770 (SC).

[12] Case No A 29/2007 (NmHC) unreported judgment delivered on 20 February 2009 at 9-11, paras 16- 19.

[13]  2018 (1) NR 1 (SC) para 18.

[14] See Keya v Chief of the Defence Force & others (SC) para 28; South African Poultry Association (SC) para 18.

[15] Swissborough Diamond Mines (Pty) Ltd v Government of the RSA 1999 (2) SA 279 (T) at 324G.

[16] Lord Woolf, Jowel. J and Le Seur, A. De Smith’s Judicial Review (2007).